Saudi’s dynamic telecom market encouraged by government initiatives to increase competition and attract foreign investment

2010 starts in a positive note in the Middle East’s telecoms market. A few weeks ago, the IMF announced it was expecting economic growth of close to 4% in the region, boosted by recovery in commodity prices, and at last week’s ITU meeting for the Arab States, GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) fared well in a report on ICT development and growth opportunities.
More particularly, the Saudi market stands out in terms of its market conditions and of the challenges it has to face in the development of its ICT sector.
Despite a relatively high GDP per capita and a large, young population, the telecommunications market had a late start in the kingdom, partly because of its geographical conditions, as vast desert areas and a tough climate make it difficult for infrastructure projects to be viable. Market liberalisation was relatively late too, with second mobile operator Zain launching in 2005 to compete against incumbent STC, and 3rd operator Mobily in 2006.
However in the last few years, the situation has changed and growth opportunities are very encouraging:
- Mobile penetration has boomed to reach well over saturation level
- The fixed–line market is growing: market leader STC is followed by new entrant Atheeb (GO), and possible new launches from PCCW and Verizon
- Mobile broadband is picking up quickly and making up for the relative lack of fixed-line infrastructure, with Mobily leading the market and claiming 100% growth in 6 months in 2009
- WiMAX technology has been being deployed by operators Bayanat Al Oula (now part of Mobily) and ITC
- Competition is due to increase with the possible introduction of MVNOs before the end of 2010.
This dynamism is due in large part to the work of the CITC which, according to the ITU, is one of the most advanced telecoms regulators in the region. It is a crucial part in the Ministry of Communications and Information Technology (MCIT)’s plan for ICT sector development launched in 2005. The plan set targets for the creation of a knowledge-based society, comprising among other objectives: e-Government initiatives, encouraging competition in the telecoms sector, increasing PC and internet penetration and raising foreign investment in ICT projects.
One way of raising foreign investments can be found in the project of Economic Cities, new towns built on Saudi soil to attract businesses and diversify the economy away from oil, with the view of contributing $ 150B to Kingdom's GDP. Economic cities are meant to deliver state-of-the art infrastructure and processes to redefine and showcase new standards around the world. Emaar (the property developer) must offer unparalleled technology with most advanced internet and broadband services for both residential and business customers.
The fact that government targets put foreign investment as a priority is good news not only for the local market, but also for the international investors. Indeed the Kingdom has had a reputation of a difficult market to enter, as the working culture can sometimes be difficult to grasp for newcomers.
That is why Informa Telecoms & Media is launching Saudi Com, a new event in the Com World Series designed to bring together operators, investors and vendors to look at the specific opportunities in the Saudi telecoms market. Already confirmed speakers include: Dr Ahmed Sindi (CEO, Atheeb/GO), Hamoud Al-Kussayer (VP Regulatory Affairs, STC), Jameel Al Molhem (VP Personal Services, STC), Gert Reider (Chief Executive Bahrain, Batelco), Alaa Malki (Director – Mobile Radio Network Planning and Design, Mobily), Rasheed Shaksheer (Director, Key Projects, Mobily), Mohammed Al Hashili (CEO, Mazoon Mobile), Ahmad Abu Zannad (Head of Consumer Segments, Zain KSA), Abdulrahman Obaied (Marketing Director, Awalnet). The event will take place in Bahrain, an easy-to-reach desitnation and popular leisure destination for Saudi nationals.

Mobile Broadband to boost Latin America’s telecoms market

Last week Chile’s incumbent operator Entel announced its first successful LTE trial, leading the way toward mobile broadband in the region. Chile is undoubtedly Latin America’s test bed for new telecoms technologies, having been the first country in the region to launch mobile WiMAX, IPTV, EDGE, and the second to launch 3G (after Puerto Rico).
This LTE annoucement is an indicator that mobile broadband is the most exciting new service to be launched in Latin America. Indeed, after years of slower growth followed by a recession that hit the region strongly, operators are in need of new models to reinforce their positions. One way is of course to reduce costs – and as elsewhere operators are looking into cost-efficiency strategies. But they will also need to reduce to trend towards lower ARPUs by launching more revenue-generating data services. That’s where mobile broadband brings the best opportunities. The fixed market occupies a relatively small position in most Latin America’s markets compared to mobile, and mobile broadband is an ideal way of reaching new internet users.
It is therefore fitting that the upcoming Americas Com event (Rio, Brazil, 30 June – 1st July) will give prominent position on its programme to broadband strategies, with a full keynote session dedicated to it, as well as a special focus session on Chile as the most innovating market in the region. The conference programme is being written and there are speaking opportunities for operators and telecoms specialists to share their expertise on the market. Don't hesitate to get in touch for more information.

As 2009 comes to a close, let's take a look at the most talked-about topics of the year in emerging telecoms markets

We're coming to the end of the year and it's time to take a look at all that happened in the last 12 months. Attending events in emerging markets throughout the year has allowed me to hear some of the industry's leading minds share their visions of the market, with some very inspirational views. Here are my thoughts on some of the most talked-about topics in emerging telecoms markets this year:
* The economic downturn
2008 ended with the predictions of global economic meltdown. As it turned out, the telecoms sector in emerging markets remained strong. A number of companies, particularly greenfield investors, experienced difficulties in securing funding for their projects, but overall operator spending was relatively high(MTN for instance spent record amounts on improving its networks across Africa), and organic growth continued in regions where penetration levels are still relatively low
* The shift in relations between operator and vendors
There have been lots of talks this year about how the telecoms value chain is changing with regards to the relations between operators and their suppliers. All parties have been calling for more partnership-based relations rather than the client-supplier approach; the new model is expected to improve efficiency and offer a more win-win situation. The growth of managed services has been a step towards it, but when listening to vendors showcase their solutions at events such as AfricaCom last month, the language they used indicated that a lot of them are still betting on the more traditional approach.
* M&A activity
This was supposed to be the year when MTN and Bharti merged to create a giant emerging markets specialist, but regulatory issues and shareholder concerns stopped the deal. Zain group was rumoured to sell off its African operations to Vivendi but it turned out that the French group was more interested in opportunities in Latin America; since then Chris Gabriel (CEO of Zain Africa) has insisted that Africa is still very much a key part of Zain group's strategy. Meanwhile, an Indian consortium was due to buy a stake in the group but the deal seems to have stalled.
* Technology evolution
WiMAX seemed to be on the way out at the beginning of the year but it has found a niche in a number of region (Eurasia, sub-saharan Africa and South East Asia) with a number of successful launches by alternative operators; on the mobile broadband front, LTE is gaining momentum with South East Asia leading the way in terms of planned deployments, and interest growing in the Middle East.
* Broadband in Africa
All eyes are on the many international connectivity projects (including submarine cables EASSy , Seacom and TEAMS in East Africa, ACE, SAT3-WASC and Glo-1 in West Africa) that are due to dramatically improve the links between Africa and the rest of the world, and enable the provision of affordable and reliable internet services on the continent. This is expected to create growth opportunities not only for the telecommunications sector but also for whole economies.
* Value-added services
ARPU levels are declining and operators worldwide are looking for the next value-added services which will reverse the trend and improve their revenues. In 2008 all eyes were on mobile money and some major launches took place this year, but now mobile internet access looks like the next best bet.
* Cost-efficiency
To counter the effect of declining ARPU, operators are looking at solutions to reduce their capex and opex and improve efficiency: outsourcing, managed services, infrastructure sharing are all avenues explored across emerging markets to improve their margins. Tower sharing companies are gaining mometum in markets such as Nigeria, a great case of business opportunities for local entrepreneurs.
* Increased competition
A high number of markets have seen or are expecting new entrants, whether they are new mobile licences, MVNOs or alternative operators; in other markets (particularly in Latin America), mobile number portability is intensifying existing competition; to respond to it, operators need to differentiate (the role of the brand has been much debated) and to be innovative with their customer retention strategies.
These are just a few thoughts on the year's themes. I'm expecting that next year will see more of the same, but don't hesitate to share your views on what will be the most talked-about topics in 2010.
In the meantime, I wish you all a happy festive season, and see you next year!

Finishing the year on a high note in Dubai and preparing for next year's event calendar

The last event of the year, the Middle East Telco World Summit in Dubai, closed earlier this week and us in the UK can all concentrate on the next big event on the calendar: the winter holiday!
I have to say that a trip to Dubai in one of our team’s most exciting events was a great way of finishing the year. 2,000 attendees from over 80 countries attended the 2 days, and discussed the key strategies for the region’s operators who are expanding their businesses, either by deploying new technologies and services in their home markets, or by expanding to new regions. Indeed, the major theme of the two days was how to balance domestic and international expansion strategies. The second day saw the introduction of a focus on the Saudi Arabian telecoms market, opened by the COOs of Mobily and Zain KSA. The operators highlighted the need for a focus on customer experience and enhanced customer relationship management, and the great opportunities available for increasing ARPUs based on the high proportion of young people in KSA and the very low broadband penetration rates.
We are now focusing on our events for the first half of 2010: EurasiaCom in Istanbul in March, East Africa Com in Nairobi in April, Saudi Com in Bahrain in May and West & Central Africa Com in Dakar in June. The brochures for the first two events will be available soon, and we are currently inviting speakers for the last two, so don’t hesitate to get in touch!

HR strategies are crucial to a changing telecoms environment, say participants to Telecom HR Summit

In the last couple of years, human resources strategies have been mentioned on a regular basis as a key focus of many groups operating in the Middle East and Africa. It started as a concern for groups expanding into new territories, with issues of including local staff to that of home markets. However more recently the global economic downturn has added a new dimension to the issue, as groups are cutting down costs, including staffing and training ones.
This week I am attending the Telecoms HR Summit, co-located with the Middle East Telco World Summit in Dubai. As the first event focusing specifically on HR strategies for the telecoms sector, the main impression I got out of the presentations and debates was how hugely important a topic it is for telcos' overall strategies.
HR in the telecoms sector faces three types of specific challenges. First, convergence: as the telecoms ecosystem is evolving, new skills are required from staff and leaders, and different types of companies are competing for the same talent pool. Second, a generational change: within a company’s staff, the baby-boom generation is joined or being replaced by members of generations X (now in their 30s and 40s) and Y (the Millennium generation), who have different ways of working and different expectations from the careers and employers. Third, the economic downturn is bringing new challenges to operators, and particularly their HR representatives, as budgets are being cut, motivation levels are down and pressure is increasing.
In light of this context, the main points of discussion at the event this week were:
- an effective HR strategy remains crucial at times of economic challenge, to retain talent, improve motivation (and therefore productivity) and manage employee rewards
- managing talent within an organisation should be an HR priority, to spot talent, develop leadership and fast-track promising employees to positions where they can add most value
- finding the right ways of rewarding performance is important when cost reduction is affecting salaries: a high basic pay is not enough for long-term performance; instead, companies should focus on KPI-based financial rewards and psychological ones (job satisfaction, good career path, availability of training and personal development, staff awards etc.)
- recruitment strategies should be adapted to new market conditions: organisations need to set in place effective processes to attract talent to the right position; these processes involve in-house recruitment, partnership with agencies, as well as new recruitment methods such as online advertising and social networking sites.
These points were illustrated by case studies of effective HR strategies from leading telcos such as Batelco, Vodafone Egypt, du, Zain, Ericsson, as well as recruitment agencies and training companies. It brought a new, highly relevant angle to the Midldle East Telco World Summit.

2,500 telecoms executives expected in Dubai next week for Telco World Summit

Part of the Com World Series, the Middle East Telco World Summit is due to open its doors on Monday, with an expected 2,500 participants from 80 countries, and 70 different oeprator companies represented.
The event has been going on for over 15 years, and has seen the emergence of the Middle East as a powerhouse of telecommunications for emerging markets. This year's conference is focusing on Middle Eastern operator groups' strategies to move beyond the region and become global players. It is no surprise then that Etisalat is a strategic operator partner of the event. The company's global presence may not yet be as broad as that of for instance Zain (also present at the event), but it is definitely making a strong mark on high growth emerging markets such as West Africa.
The conference programme covers all the key strategic issues in the market (from network developments to regulation, value-added services and marketing strategies), and also incorporates two brand new elements this year: The Saudi Arabia Focus Day dedicated to the Middle East’s fastest growing market and the two day Telecoms HR Summit set to analyse the changing role of HR managers during the current economic downturn.
I will be at the event for the first time this year and I am looking forward to witnessing the debates in this exciting market. I am curious about the general mood in the region following the city's economic difficulties. Judging from the response to next week's event, I would guess that the city's busy events industry won't be severely affected by this.

Cost-efficiency and outsourcing major focus for operators in 2009-2010

Zain’s announcement this week that it is to outsource its East African networks (in Kenya, Tanzania and Uganda) to Nokia-Siemens Networks is not surprising considering the focus of the company on cost-efficiency. Chris Gabriel, CEO of Zain Africa, said in a statement that the outsourcing agreement was part of Zain’s Drive11 strategy of improving efficiency and network quality and that it will enable the operator to focus on its customers.
Mr Gabriel gave the opening keynote speech at the AfricaCom congress held earlier this month in Cape Town, and dedicated a large part of the presentation to the subject of outsourcing, a change from last year’s speech which focused heavily on the power of the brand. This year’s message resonated heavily with the audience and other speakers, as African operators are facing declining ARPU levels and looking at cost-efficiency strategies. The AfricaCom event was a great place to discuss them, with sessions on managed services, infrastructure sharing, call centre outsourcing, network deployment and sustainable solutions, as well as a number of companies promoting their products in the adjacent exhibition. Among them were the aforementioned NSN and its close rivals Ericsson, Huawei , ZTE, but also companies specialising on aspects of outsourcing such as call centre company PCCI, tower sharing solutions vendor Turkkule and more.
Gabriel and other speakers advocated new partnership models between operators and their vendors, and he is certainly making this a priority for the group as other deals have been announced in the last few months in its African operations (a five-year managed services deal with Ericsson in Nigeria announced in June for instance).
This will certainly be a major topic of discussion in the coming year: Informa Telecoms & Media predicted in their end-of-year Industry Outlook event in London today that network sharing and outsourcing was going to be one of the Top Ten major issues for operators in 2010. Informa’s top analysts announced that the telecoms industry should “expect further infrastructure sharing announcements during 2010 as operators attempt to extend coverage and reduce costs. Both network sharing and outsourcing will continue to gain momentum as mobile operators seek to reduce their capex and opex burden. Each of these individually is already an established trend but we can also expect to see more variations on a theme where the two approaches are combined.”
Cost efficiency will be one of the key topics discussed at events in the Com World Series in 2010, as well as broadband developments (with LTE gaining interest in emerging markets), value-added services (with mobile banking still a major issue, but also more on data), marketing and customer relations and more. I am currently working on the programme for our next West & Central Africa Com event, which will be held in Dakar, Senegal. If you want to be involved in the programme or send suggestions of topics and speakers to include, don’t hesitate to get in touch!

In times of changing market conditions, operators turn to Darwin for inspiration

Telecoms markets worldwide, and even more so emerging ones, are going through profound changes. Whether you look at business models, supplier relations or services, all operators need to embrace change in order to compete in a market that is affected not only by tough economic conditions but also going through changes in its ecosystem. It’s no wonder then that Charles Darwin is so often quoted by telecoms executives these days, with his famous words: “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
It was mentioned a few times at the ‘Convergence in Istanbul’ event organised by the SAMENA Council this week, where people were also talking about “new rules of the game” and “a new paradigm” in the way operators must approach the market. The main change all telecoms players are facing is of course the economic situation. Once again, speakers were keen to point out that the telecoms sectors isn’t as affected as others by the downturn. But operators are experiencing a renewed interest from governments to be involved in the sector, as it is widely seen as an engine for recovery. In a rare show of unity, the CEOs of some of the region’s leading operators, incumbents and challengers alike (Turk Telekom, Etisalat, STC, Mobinil, Alpha, du, and more) voiced their concerns today.
One of the major topics at the event, and a direct link to the economic situation, was how operators improve their efficiency (this was the focus of a pre-event day hosted by Nokia Siemens Networks, and came back in most of the talks at the main conference). Running leaner operations is a key aspect of operators’ efficiency strategies, in particular thanks to outsourcing. But most interestingly the relations between operators and their vendors are being redefined, changing the shape of the telecommunications ecosystem. Indeed, new needs in the market, new technologies and new business models mean that forward thinking operators are building relationships with vendors that are based on partnership rather than a client/supplier basis. One positive consequence is that such partnerships help foster innovation in operations, technologies and services. Another partnership model touches on the financing itself: the ’pay as you grow’ model, where the vendor takes an interest in the operator’s success.
Has this change been brought upon or accelerated by the tough economic climate, or is it a natural evolution of the market? The new, more efficient models are being pioneered in markets such as India and Africa, so it may be that fast-growing emerging markets are breeding grounds for innovation.
The shift in the telecoms ecosystem and business models will be one of the key topics addressed at next week’s AfricaCom congress, the 12th annual pan-African event to be held in Cape Town. Judging by the record registration numbers and interest from companies from around the world, this event should be a great place to share thoughts and encourage innovation in telecoms markets.

Telecoms and media industry survey - share your views and win a report or iPod touch

My market analyst colleagues at Informa Telecoms & Media are conducting a survey to capture the mood of the telecoms market and I would encourage all of you to take part. Here's how it works:

As 2009 draws to an end we want to understand what you feel are going to be the hot topics in the telecoms and media industry in 2010 and how your business is performing in the current climate.

By taking part in our short survey, which will take just 5 minutes, you will help us to define our industry research and conference agenda for next year. In return, you'll receive an overview of the results and you will be entered into a prize draw where 10 people will each win a research report of their choice, and one winner will receive an iPod touch.

To take the survey visit: http://www.informatm.com/itmlogos/survey/io/io_2010.htm

North Africa Com 2009: North Africa still showing strong growth in changing market conditions

North Africa's telecoms market is set to remain on of the most dynamic of the emerging regions, judging by the successful opening of this year's North Africa Com congress. The event opened today in Cairo with a stellar line up of speakers and record breaking attendance, allowing busy networking among the participants.
According to my colleagues attending the event, the discussions focused on how to move the region's telecommunications market forward, as telecommunications companies in the region are adapting their strategies to face new market conditions. Following several years of high growth and increasing competition, the telecommunications sector isn't as affected as others by the global economic downturn, but operators are facing new challenges related to investment, consumer spending and high operating costs.
The programme included strong representation from host country Egypt, Algeria (one of Africa's fastest growing markets), as well as leading operators in Tunisia and Morocco.
Emerging markets specialist Orascom Telecom was represented by Mr Tamer El Mahdi, the CEO of the Algerian branch – Djezzy – OT’s most profitable branch. Mr El Mahdi described how Djezzy is “fighting in the trenches” as the changing economy begins to affect telecommunications in North Africa, but he also painted a positive picture of the operator overall, describing how revenue is rising steadily, as well as a similar trend in cutting costs – very promising for this leading operator. There were also positive messages from Dr Olfat Abdel Monsef, Vice President, National Telecommunications Regulatory Authority (NTRA), Egypt, as she described the regulators aim of a more simplified regulatory process, eventually focusing more on competition regulation – rather than licences, etc.
Other leading speakers from Day 1 included Mr Abderrahmane Mounir, Director of B2B for Meditel, Morocco, Jean-Carl Mazigi, Chief Strategy Officer for Wataniya Telecom Algeria (Nedjma), Sami Ayoub, Deputy-CEO, Tunisie Telecom, Khaled Hegazay, Corporate Affairs Director, Vodafone Egypt, Ricardo Tavares, Senior VP, Public Policy, GSMA, Wael Fakhanary, Egypt & NA Manager, Google. This broad spectrum of industry thought leaders brought a wealth of experience and perspectives to this opening day, and it has been a valuable “well organised event” for delegates, according to Mr Sami Ayoub, Deputy-CEO of Tunisie Telecom.
The main messages taken from today included the benefits and challenges for 3G services in North Africa – with some countries facing the prospect of no 3G at all in the case of Algeria. Furthermore, the need to accommodate for increasing numbers of subscribers and to understand user behaviour. Finally, a key message has been that operators need to keep adapting in this dynamic region, leading service providers like Djezzy may have a huge market share for now, but operators need to ensure that they do not focus solely on voice services. As Mr Fakharany from Google said “operators with big market share in voice – but if there are no 3G services – this is dangerous for the future.”
The high level of the talks in the conference encouraged lively debate among the congress participants, who were networking enthusiastically in between sessions. Despite budget restrictions among the region's companies, executives from over 20 countries travelled to the event, representing a broad picture of the telecommunications sector: leading operators, alternative service providers, regulators and government bodies, industry associations, and providers of a range of solutions for telecommunications operators (from infrastructure to co-location solutions, power, CRM and more).
The second day of the event will include even more presentations and debate from leading regional figures, including; Hatem Dowidar, CEO, Vodafone Egypt, Hassan Kabbani, CEO, Mobinil Egypt, Charles-Henri Levaillant, Corporate VP, Strategy & Development, Vivendi Group (share holders of Maroc Telecom), Mr Cherif Yaici, Director of Business Strategy, Algerie Telecom Group, Mohammed Bouhelal, Chief Corporate Affairs Officer, Canar Telecom Sudan, Marwan Hayek, VP Technologies, Mobinil Egypt, and more!
The second day of the event opens at 9 at the JW Marriott. Don't miss it if you're in Cairo.